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Malaysian economy to deteriorate in H208: think-tank
April 16, 2008, 1.02 pm (Singapore time)

KUALA LUMPUR - Malaysia's economy would decline in the second-half of the
year due to a downturn in the US economy with growth in 2008 expected to
reach 5.4 per cent, an independent think tank said on Wednesday.

The Malaysian Institute of Economic Research (Mier) said that the Malaysian
economy could sustain its rate of growth in the first-half of 2008 'before
cooling in the second-half'. 'The fear is that the US turmoil is getting
deeper and nobody is certain when it will bottom out,' it said.

'We stick to our earlier growth forecast of 5.4 per cent this year ... until
there is clearer evidence that the economy has lost momentum.'

'It is likely that growth would remain sound in the first-half, but
conditions would deteriorate in the second-half of 2008 as the Malaysian
economy takes the hit from the knock-on effects,' it added.

Last month the central bank said that Malaysia's growth is expected to slow
to 5.0-6.0 per cent in 2008, down from 6.3 per cent last year.

Mier warned that food prices would continue to rise and Malaysia would see a
hike in inflation.

'Price pressures may persist with the rise in global prices of agriculture
produce and the threat of imported inflation arising from higher world oil
prices,' it said.

Malaysia's annual inflation rate in February was 2.7 per cent compared with
2.3 per cent in January due to a strong rise in food prices. Bank Negara
expects inflation for the year rise to 2.5-3.0 per cent from 2.0 per cent in
2007.

Anger over rising prices was also a major factor in the March elections
which saw the ruling coalition lose a third of parliamentary seats and five
states in its worst results in half a century. -- APR
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